Chens to pay $20m to Amalgamated

Tikal Limited and businessmen Wayne Chen and Richard Chen have failed in their bid to set aside a default judgment of US$175,000 (just over J$20 million at current rates) with interest which Amalgamated (Distributors) Limited had obtained against them in the Supreme Court.

Justice Glen Brown heard the application and refused it.

Amalgamated sued Tikal and the Chens in October 2011 for failing or refusing to honour their obligations under a settlement agreement dated April 21, 2010, for goods sold and delivered to Tikal.

Amalgamated claimed that Tikal and its guarantors, the Chens, breached the settlement agreement and have failed to pay the outstanding amount.

On January 11, 2012, judgment in default was entered against Tikal and the Chens because they failed to file a defence within the specified time.

They made an application on January 31, 2013, to set aside the default judgment. They contended that the reason for the delay was as a result of the inadvertence of their former attorneys who failed to defend the claim. They also argued that by accepting gradual payments from them, Amalgamated waived its rights and should, therefore, be prevented from bringing an action against them.

Justice Brown said the court has a discretion to set aside a default judgment, but the court must consider certain things, one of which was whether a defendant has applied to the court as soon as is reasonably practicable after finding out that the judgment has been entered.

The judge pointed out that Tikal and the Chens new attorneys began representing them since November 22, 2013, and did not file the application until January 31, 2014, to set aside the judgment.

Tikal and the Chens said the three-month period was used to review the matter and prepare the application. However, the judge said, "The excuse provided to satisfy a period of three months is insufficient."

Justice Brown said Tikal and the Chens maintained that Amalgamated was estopped from bringing an action to recover the balance owed because Amalgamated had impliedly waived its rights.

The conduct, which Tikal and the Chens relied on to satisfy the alleged waiver was that Amalgamated took no action until August 25, 2010 to request the balance outstanding since January 2010. They also contended that Amalgamated continued to accept small payments they made and they believed that the acceptance was Amalgamated's way of suggesting that they had sufficient time as they needed to pay the balance.

In assessing their defence, Justice Brown said Tikal and the Chens must show that there was some evidence of clear and unequivocal conduct by Amalgamated that it intended to waive its rights to bring an action and that they relied on said conduct.

Alleged acceptance of payment

The judge said, in this case, Tikal and the Chens had only alleged that there was acceptance of payment. There was no agreement or negotiation between the parties to extend time. "Mere acceptance of the payment due cannot in and of itself amount to a waiver, especially where there is a substantial balance remaining," the judge said.

Justice Brown noted that Tikal and the Chens are not disputing that they are indebted to Amalgamated. "However, they failed to satisfy the court that there is a reasonable prospect of successfully defending the claim."

In addition, he said, the court is of the view that the reason for the delay in seeking to set aside the default judgment was not sufficiently reasonable. "Therefore, (to rule) in accordance with the overriding objective, to set aside the default judgment, would be prejudicial to the claimant (Amalgamated) and not in the best interest of the administration of justice."